Home renovations serve a decorative and practical purpose for homeowners. While it’s appealing to envision a home’s upgraded curb appeal, it also has much to do with serving practical improvements in a home. This includes repairs from natural disasters to improvements for basic utilities like plumbing and heating pipelines.
Receiving Funds to Repair Your Home
It’s more common to secure home renovation loans to perform repairs on currently owned properties. However, it’s also a typical loan option when purchasing damaged properties. This is what investors in the real estate market get to fund their renovation projects for flipping homes. Since there’s a variety of home renovation loans in the market, you can choose which one will fit precisely for your purposes.
In this article, we’ll share three home renovation loans you can consider for your next home project.
FHA 203(k) Loans
This loan type is a government-backed loan open to buyers with less than appealing credit scores. While it’s generally an expensive mortgage, it’s a great option if you don’t have enough capital to pay for your down payment in full. However, it still includes an upfront fee included in the loan’s overall principal.
You can choose between full and streamline loans, depending on the extent of renovations you need. A full loan is generally used for primary residences in need of major repairs from property damage. On the other hand, streamline loans are just for minor issues that need fixing that cost less than 35 thousand dollars in total.
The Fannie Mae HomeStyle® Loans
This loan option is similar to FHA loans by being government-backed financing options. It’s a single-close loan that covers the cost of home repairs for various uses. For example, it can supplement the repairs an appraiser will point out or necessary cosmetic and structural improvements a homeowner needs.
For these loans, you can choose between 15- or 30-year mortgage terms. This also gives you the ability to choose between fixed- and adjustable-rate arrangements. Keep in mind that your HomeStyle’s total loan amount is computed as the projected value of your home after the application of renovation changes.
USDA Rural Development Home Repair Loans
The US Department of Agriculture (USDA) allows homebuyers to receive safe and decent housing by providing financial options to address structural issues. This allows you to treat different parts of your household, from siding installations to roofing system upgrades. Besides repairs on interiors and exteriors, this loan type is applicable to plumbing and electrical improvements, including appliance purchases. However, these purchases must be necessary for the health and well-being of the buyer and other members of the household.
It’s important to remember that the USDA rural development home repair loan strictly conforms to the state’s economic performance. For this reason, eligibility to this program depends on a homebuyer’s income falling above 50 percent of the area’s median income. This is why different regions will have varying conditions on the eligibility of borrowers.
Although the loan options above practically serve similar goals, that doesn’t mean that there’s a clear leader for all situations. Since all homes are unique, you must assess the conditions of your home and the scope of your renovation project. This is why it will benefit you to get a professional’s opinion to identify which loan option will work best for you.
ACB Mortgage Solutions is a mortgage company in Massachusetts dedicated to giving homebuyers the right financing options. With years of experience under our belt, we can assist you in getting the best housing loan for your situation. Schedule an appointment with us to learn more about our other loan services.